Joanna Tuffy
Question:64. Deputy Joanna Tuffy asked the Minister for Finance if he will provide an update on the mortgage arrears process (details supplied); and if he will make a statement on the matter. [10160/14]
View answerThursday, 27 February 2014
Questions (64)
Written answers
It is recognised that some borrowers in mortgage arrears may also be experiencing difficulty with the repayment of other debts from other lenders. While the Code of Conduct on Mortgage Arrears only applies to a mortgage loan which is secured on a primary residence, the Code nevertheless places an onus on the mortgage lender, when assessing a case under the MARP process, to take account of the borrower's full circumstances including his/her personal circumstances and overall indebtedness. If a lender does not offer an alternative repayment arrangement in respect of a primary home mortgage, or if the borrower is not willing to enter into an alternative repayment arrangement offered, the borrower may appeal the matter to the lender's Appeals Board. Furthermore, if a borrower is not happy with the outcome of the appeal/complaint made to the lender he/she can refer the matter to the Financial Services Ombudsman (FSO). Further information on how to make a complaint to the FSO is available at www.financialombudsman.ie .
Many distressed borrowers with debts from more than one lender may have to deal with each lender on an individual basis in order to deal with an overall indebtedness problem. It is recognised that this can cause a difficulty in dealing with an overall unsustainable debt situation. In view of this, in May 2013 the Central Bank commenced a pilot process to facilitate a voluntary agreement for the restructuring of secured and unsecured distressed debt cases which involve more than one lender. The aim of the pilot framework was to achieve, with the voluntary agreement of all lenders, a sustainable and fair debt restructuring outcome to an unsustainable debt situation. In particular, it sought to promote and enhance cooperation between lenders in order to resolve an individual's overall distressed debt position. This multi-debt pilot scheme, which was facilitated by the Central Bank, included the main mortgage lenders and credit unions. The pilot scheme has now come to an end with case referrals to the scheme operator ceasing on 31 December last. Data from the pilot is in the process of being compiled and analysed and a report on the pilot is expected to be finalised in the coming weeks.
Of course, if a borrower is unable to secure voluntary agreement from his creditors (either on an individual or co-ordinated basis) to address an overall unsustainable debt position, the Personal Insolvency Act now provides a statutory mechanism, outside of judicial bankruptcy, that will require all relevant creditors to consider, in an orderly and holistic manner, a formal proposal from a debtor to address an insolvent position. In that context, the Personal Insolvency Arrangement framework was specifically designed to deal with secured and also any unsecured debt the borrower may have, and if the debtor's proposed arrangement is accepted by the necessary majority of creditors it will then be binding on all relevant creditors.